Act on Special Measures Concerning Taxation

Where an individual's assets prescribed in the items of Article 33, paragraph (1) or the items of Article 33-2, paragraph (1) have come to fall under those provisions (including where a transfer through expropriation, etc. is deemed to have been made, pursuant to the provisions of Article 33, paragraph (4), with regard to the land, etc. prescribed in item (i) of that paragraph, the assets on the land prescribed in item (ii) or item (iii) of that paragraph or the spouse's right of residence pertaining to a building on that land, or the right prescribed in item (iv) of that paragraph; where a transfer through expropriation, etc. is deemed to have been made, pursuant to the provisions of paragraph (3) of the preceding Article, with regard to former assets or the part of former assets specified by Cabinet Order referred to in that paragraph; and where a transfer through expropriation, etc. is deemed to have been made, pursuant to the provisions of paragraph (5) of that Article, with regard to the part of former assets in a disaster prevention project specified by Cabinet Order referred to in that paragraph), if the individual does not receive the application of the provisions of Article 33 or Article 33-2 with regard to any of the assets that have come to so fall during that year (including where the individual has not received the application of the provisions of Article 33-2 and has received the application of the provisions of Article 33, but comes not to receive the application of the provisions of Article 33 by filing an amended return form under the provisions of paragraph (1) of the following Article), then with regard to the application of the provisions of Article 31 or Article 32 of this Act, or Article 32 or Article 33 of the Income Tax Act, to the transfer of all of those assets through expropriation, etc. or disposition by exchange, etc. (hereinafter referred to as "expropriation or exchange, etc." in this Subsection), the following provisions apply:

in Article 31, paragraph (1), the phrase "the amount of long-term capital gains (" is deemed to be replaced with "the amount remaining after deducting 50 million yen (or, where the portion of the amount of long-term capital gains pertaining to the transfer of assets that falls under the provisions of Article 33-4, paragraph (1) is less than 50 million yen, the amount of the portion pertaining to the transfer of those assets) from the amount of long-term capital gains (";

in Article 32, paragraph (1), the phrase "the amount of short-term capital gains (" is deemed to be replaced with "the amount remaining after deducting 50 million yen (or, where the portion of the amount of short-term capital gains pertaining to the transfer of assets that falls under the provisions of Article 33-4, paragraph (1) is less than 50 million yen, the amount of the portion pertaining to the transfer of those assets) from the amount of short-term capital gains (";

the balance remaining after deducting necessary expenses from the revenue pertaining to timber income referred to in Article 32, paragraph (3) of the Income Tax Act is the amount remaining after deducting 50 million yen (or, where the amount equivalent to that balance is less than 50 million yen, the amount equivalent to that balance) from the amount equivalent to that balance pertaining to the transfer of those assets;

the balance remaining after deducting the total of the acquisition cost of the assets that gave rise to the income and the amount of the expenses required for the transfer of the assets from the revenue pertaining to capital gains referred to in Article 33, paragraph (3) of the Income Tax Act is the amount remaining after deducting 50 million yen (or, where the amount equivalent to that balance is less than 50 million yen, the amount equivalent to that balance) from the amount equivalent to that balance pertaining to the transfer of those assets.

In the case referred to in the preceding paragraph, where the provisions of two or more of the items of that paragraph apply to the individual's transfers of assets through expropriation or exchange, etc. during that year, the amount to be deducted pursuant to the provisions of those items is the amount calculated pursuant to the provisions of Cabinet Order within the limit of 50 million yen in total.

The provisions of paragraph (1) do not apply to the assets specified in the following items in the cases listed in those items:

where the transfer through expropriation or exchange, etc. of the assets prescribed in paragraph (1) has not been made by the day on which six months have elapsed from the date on which an offer for the purchase, extinction, exchange, demolition, removal or use (hereinafter referred to as "purchase, etc." in this Article) of the assets was first made by the person making that offer (hereinafter referred to as the "public works undertaker" in this Article) (where, with regard to the transfer of the assets, an arbitral award prescribed in Article 15-11, paragraph (1) of the Expropriation of Land Act has been made based on an application for arbitration under the provisions of Article 15-7, paragraph (1) of that Act (limited to an application made on or before that day), where a request for payment of compensation under the provisions of Article 46-2, paragraph (1) of that Act has been made, or where permission under the provisions of Article 3, paragraph (1) or Article 5, paragraph (1) of the Cropland Act (Act No. 229 of 1952) must be obtained or a notification under the provisions of item (vi) of that paragraph is made, the day on which the period specified by Cabinet Order has elapsed from that day): the assets;

where there have been two or more transfers through expropriation or exchange, etc. of the assets prescribed in paragraph (1) for a single project pertaining to expropriation or exchange, etc., and those transfers have been made over two or more years: of those assets, the assets other than those transferred in the year in which the transfer was first made;

where the transfer through expropriation or exchange, etc. of the assets prescribed in paragraph (1) has been made by a person other than the person who first received the offer of purchase, etc. with regard to the assets (excluding where a person who acquired the assets from the person who received the offer due to the death of that person has made the transfer): the assets.

With regard to a person who would be required to file a tax return for the year even if the provisions of paragraph (1) were applied, the provisions of that paragraph apply only if the tax return for the year for which the person seeks the application of the provisions of that paragraph or the amended return form referred to in that paragraph contains a statement to the effect that the person seeks the application of the provisions of that paragraph, and has attached to it a document, delivered by the public works undertaker, certifying that the offer of purchase, etc. referred to in the preceding paragraph has been made with regard to the assets for which the person seeks the application of the provisions of that paragraph, and other documents specified by Order of the Ministry of Finance.

Even where no tax return or amended return form referred to in paragraph (1) has been filed, or where a tax return or amended return form referred to in paragraph (1) without the statement or attachment referred to in the preceding paragraph has been filed, the district director may, when the district director finds that there were unavoidable circumstances for the failure to file the return or to include the statement or attachment, apply the provisions of paragraph (1), only if a document containing the statement and the documents specified by Order of the Ministry of Finance referred to in the preceding paragraph are submitted.

A public works undertaker must, pursuant to the provisions of Order of the Ministry of Finance, submit copies of the documents certifying that the offer of purchase, etc. prescribed in paragraph (4) has been made with regard to all of the assets pertaining to the offer of purchase, etc. referred to in paragraph (3), and a report on payments for the purchase, etc. of those assets, to the district director having jurisdiction over the location of the business office, place of business or other business establishment involved in the implementation of the project.

Where the amount of timber income or the amount of capital gains that formed the basis for calculating the amount of income tax for which permission for deferred payment prescribed in Article 132, paragraph (1) of the Income Tax Act was granted includes an amount pertaining to the transfer of assets to which the provisions of paragraph (1) were applied, the amount calculated pursuant to the provisions of Cabinet Order as the portion of the interest tax under the provisions of Article 136 of that Act pertaining to the deferred payment that corresponds to the amount of income tax on the amount of timber income or the amount of capital gains pertaining to that transfer is exempted.

A person who has received the application of the provisions of Article 33, paragraph (3) (including as applied mutatis mutandis pursuant to Article 33-2, paragraph (2); hereinafter the same applies in this Article) must, where the person falls under a case listed in any of the following items, file an amended return form of income tax for the year that includes the date of the expropriation or exchange, etc. within four months from the date specified in the relevant item, and must pay, within that time limit, the amount of tax to be paid upon filing that return:

where substitute assets have been acquired and the acquisition price of those assets is less than the estimated amount of the acquisition price prescribed in Article 33, paragraph (1) as applied with the deemed replacement of terms pursuant to the provisions of paragraph (3) of that Article: the date on which those assets were acquired;

where substitute assets have not been acquired within the designated acquisition period prescribed in Article 33, paragraph (3): the day on which the designated acquisition period has elapsed.

Where a case listed in any of the items of the preceding paragraph has come to apply, if the amended return form is not filed, the district director having jurisdiction over the place for tax payment is to make a reassessment pursuant to the provisions of Article 24 or Article 26 of the Act on General Rules for National Taxes with regard to the amount of income, the amount of income tax, and other matters that should have been stated in that return.

With regard to the application of the provisions of the Act on General Rules for National Taxes to an amended return form under the provisions of paragraph (1) and the reassessment referred to in the preceding paragraph, the following provisions apply:

except in the case of applying the provisions of Article 20 of the Act on General Rules for National Taxes, an amended return form referred to above that is filed within the filing deadline prescribed in paragraph (1) is deemed to be a return filed by the due date as prescribed in Article 17, paragraph (2) of that Act;

with regard to an amended return form referred to above that is filed after the filing deadline prescribed in paragraph (1) and the reassessment referred to above, in the provisions of Chapters II through VII of the Act on General Rules for National Taxes, the phrases "statutory tax return due date" and "statutory payment due date" are deemed to be replaced with "deadline for filing an amended return form prescribed in Article 33-5, paragraph (1) of the Act on Special Measures Concerning Taxation"; in Article 61, paragraph (1), item (i) of that Act, the phrase "return filed by the due date" is deemed to be replaced with "tax return prescribed in Article 2, paragraph (1), item (x) of the Act on Special Measures Concerning Taxation"; in paragraph (2) of that Article, the phrase "return filed by the due date or return filed after the due date" is deemed to be replaced with "amended return form under the provisions of Article 33-5, paragraph (1) of the Act on Special Measures Concerning Taxation"; and in Article 65, paragraph (1), paragraph (3), item (ii), and paragraph (5), item (ii) of that Act, the phrase "return filed by the due date" is deemed to be replaced with "tax return prescribed in Article 2, paragraph (1), item (x) of the Act on Special Measures Concerning Taxation";

the provisions of Article 61, paragraph (1), item (ii) and Article 66 of the Act on General Rules for National Taxes do not apply to an amended return form and a reassessment prescribed in the preceding item.

If a person who has been subject to the provisions of Article 33, paragraph (3) has acquired a substitute asset within the designated acquisition period prescribed in that paragraph and the acquisition price thereof has turned out to be excessive in relation to the estimated amount of the acquisition price prescribed in paragraph (1) of that Article as read with the terms replaced pursuant to the provisions of that paragraph, the person may, within four months from the day on which the person acquired the substitute asset, make a request for reassessment of the income tax for the year that includes the day on which the expropriation or exchange, etc. took place to the district director with jurisdiction over the place for tax payment.